Okay, the bears won the round yesterday, but this is a 15-round fight, so it is far from over, especially if the earnings reports keep coming as they have been coming. Currently, the number of companies topping expectations is above 80%, which is higher than the normal, but more importantly, the global bellwether companies such as Alcoa, Microsoft, and GE are topping expectations strongly. GE is an excellent example of why the market should start believing in a global return to economic health.
General Electric Co. topped Wall Street’s profit and revenue forecasts for the first quarter … The largest U.S. conglomerate said industrial orders had risen 20 percent in the quarter and that selling prices had improved in most of businesses. “We witnessed broad-based strength in orders across all our infrastructure businesses and in both equipment and services,” Jeff Immelt [CEO] said.
That is quite the positive statement from the head of one of the largest multinational companies on the planet. Backing it up is the fact that GE beat on revenues, which it has failed to do in quite some time. This is good news for the rest of the industrial sector coming up next week.
United Technologies Corp, 3M Co, and Caterpillar Inc will report earnings next week. If they do as Alcoa, Microsoft, And GE have done, things could get going in the right direction again with the market. Spain is still there, and whatever happens there will move the market, either up or down, certainly, and that flies in the face of my contention that the most important thing to the market is earnings, but this is the market, after all, and nothing is ever for certain.
Interestingly, the market has responded sans enthusiasm for the mixed economic data as of late and the strong earnings, but there is one thing to keep in mind with that data coming out – it is lagging. Investors understand this, I am sure, but like anyone prone to fearful behavior, the market just can’t help reacting to the idea that a boogey man is in the closet or under the bed. But for the rest of us, looking forward not backward is the way to make our money work. So even though factory activity slipped in the mid-Atlantic region and employment seems weaker than it should be, the near future is still looking good.
A measure of future U.S. economic activity rose in March for the sixth straight month, a sign that the economy may be gaining momentum. The Conference Board said Thursday that its index of leading economic indicators rose 0.3 percent in March, after a 0.7 percent increase in the previous month. The index now stands at 95.7, the highest level since June 2008.
Now, mix this data in with good earnings and the market surely will see the direction ahead. Did I just say “surely?” It grates on me to be so “positive,” but it seems to me the market will have to recognize the global reality sometime, especially when economic powerhouse Germany seems to be turning a corner in its battle with the global economic undulations.
German business sentiment unexpectedly rose for the sixth month in a row in April in a sign that Europe’s largest economy continues to outpace peers and shrug off persistent worries about the euro zone debt crisis.
So, Germany is Germany, and Spain is still Spain, and until that “little” issue gets put to bed …
Trade in the day – Invest in your life …
